How safe is your investment?

Below we give a summary of the key protections that apply to you as a private investor.

1. HL is regulated by the Financial Services Authority (FSA) and is bound by their rules and regulations in the conduct of our investment business. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Stockbrokers Limited are authorised by the FSA to hold client money and client assets. You can telephone the FSA Consumer Help Line on 0845 606 1234 (8am-6pm Monday to Friday), to check our registration or ask other queries. Alternatively, you may write to them at the FSA Consumer Help Line, 25 The North Colonnade, Canary Wharf, London, E14 5HS or you can visit www.fsa.gov.uk
   
   The FSA requires firms to publish certain information to enable the market to assess a firm's risks, capital and risk management procedures - known as Pillar 3 disclosure - 2009
2. We make regular submissions of our solvency to the FSA, together with annual audited financial statements, annual audited returns of information and a report from the auditors assessing our compliance with the FSA client money rules. See our annual reports and accounts. These demonstrate that we take a very conservative approach to accounting - no borrowings and we hold considerably more cash than the regulations require. The majority of our income is generated from renewal commission. We share this with our clients and this further aligns our interests with theirs. It is a secure source of income as it is spread across a large number of providers and new business takes a long time to translate into profits, so unlike many firms we are not dependant on short term new business to cover our costs.
3. All client money is held on deposit in Trust accounts, so that any creditors of Hargreaves Lansdown would have no legal right to it, we cannot use any of this money to cover Hargreaves Lansdown's obligations, and is subject to controls and procedures over and above those required by the FSA. In addition client money within the Vantage Service will be spread across a number of banks to reduce risk.
   
   Our policy for choosing banks is continually reviewed and the primary consideration is always security. We monitor the performance and security of a range of banks to ensure we are able to anticipate and react to changing economic and institutional conditions.
   
   We have continued to maintain a conservative approach on which of these banks to use, preferring those which we believe the government would fully support in any further financial crisis. It is therefore our considered decision to use a minimum of 5 banks each with separate UK banking licences.
   
   The Financial Services Compensation Scheme (FSCS) provides that each individual is entitled to up to the equivalent in sterling of 100% of the first €100,000 in total in compensation for losses across all their deposits with that institution. Our current policy, which diversifies client money between a number of separately licensed institutions, means that our clients would receive this level of protection with each of the banks we use.
   
   Stock you hold with us is held by Hargreaves Lansdown Nominees Limited, a non-trading company which is a member of the Hargreaves Lansdown Group of Companies. As a non-trading company it cannot run up liabilities of its own and Hargreaves Lansdown accepts full liability for any default by our nominee company. All your assets are held in an account designated with your name and, as with client money, are subject to controls and procedures over and above those required by the FSA.
   
   We do not lend any stock held in Vantage.
4. Investors are likely to be covered by the provisions of the Financial Services Compensation Scheme (FSCS), if Hargreaves Lansdown ceases trading. It can award up to £50,000 (increased from £48,000 in January 2010) in compensation to any one investor where they decide that an investment business is in default and is unable to satisfy any claims against it. In addition, if one of the banks which we use for depositing cash balances is declared in default, each individual is entitled to up to the equivalent in sterling of 100% of the first €100,000 in total in compensation for losses across all their deposits with that institution. Full details of the FSCS detailing the restrictions and financial limits that apply are available on request from the FSCS. You can contact them on 0207 892 7300 or at www.fscs.org.uk. You can also write to them at FSCS, 7th Floor Lloyds Chambers, Portsoken Street, London E1 8BN.
5. All Hargreaves Lansdown Group companies are registered in England and Wales and consequently are governed by the Companies Act, which includes a requirement to have the financial accounts audited each year by independent accountants, we currently use the international firm Deloitte, which is one of the big four chartered accountants in the world. They also do our regulatory audit.
6. Hargreaves Lansdown Asset Management Limited is also registered with HM Revenue and Customs to enable us to act as an ISA and SIPP manager. Accordingly, our procedures for operating ISA and SIPP Plans are also independently assessed by HM Revenue and Customs.
7. Unit trusts and OEICs use a trustee or depositary to actually hold the title to the underlying stocks they hold in their funds. This means that if the fund manager gets into financial difficulty your assets are protected from their creditors. The time that the FSCS does not protect you is if one of the underlying stocks within a fund manager's portfolio goes bust.

We want to ensure that everybody who invests with Hargreaves Lansdown is content about the nature of the investment that they have made and the various protections that are available to them. Accordingly, please feel free to contact us at any time if you would like to discuss the contents of this fact sheet in greater detail.

Hargreaves Lansdown Group comprises the following regulated companies: Hargreaves Lansdown Asset Management Ltd, Hargreaves Lansdown Stockbrokers Ltd, Hargreaves Lansdown Pensions Direct Ltd and Hargreaves Lansdown Fund Managers Ltd.